(Edgar Glimpses Via Acquire Media NewsEdge)
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto included under Item 1, Financial
Statements (Unaudited) of this Quarterly Report on Form 10-Q. This discussion
contains forward-looking statements, the realization of which may be impacted by
certain important factors, including, but not limited to, those discussed in
Risk Factors, in Part II, Item 1A included herein. Please see "Cautionary
Statement Regarding Forward Looking Statements" at the beginning of this report,
for additional information regarding such forward looking statements.

Our business consists of the design, manufacture, marketing and sale of products
to improve coverage, capacity and data speed in wireless communications
networks. Our principal products include antennas, boosters, combiners,
cabinets, shelters, filters, radio frequency power amplifiers, remote radio head
transceivers, repeaters, tower-mounted amplifiers and advanced coverage
solutions. These products are utilized in major wireless networks throughout the
world, which support voice and data communications by use of cell phones and
other wireless communication devices. We sell our products to both original
equipment manufacturers, who incorporate our products into their proprietary
base stations (which they then sell to wireless network operators), and directly
to individual wireless network operators for deployment into their existing
networks. We have also started marketing in new markets such as government,
public safety, military and homeland security.

During the last ten years, demand for wireless communications infrastructure
equipment has fluctuated dramatically. While demand for wireless infrastructure
was strong during 2005, it weakened for us during 2006 and 2007 due to
significant reductions in demand by three of our major customers, as well as a
general slowdown in overall demand within the wireless infrastructure industry.

In 2008, demand for our products once again increased; however, in the fourth
quarter of 2008 demand was negatively impacted by the global economic recession.

The recession and the ensuing period of economic weakness and uncertainty have
significantly impacted demand for our products during the last three years. In
particular, our revenue in 2009 fell by 36% from 2008 levels, negatively
impacting our financial results. In response, during 2008 and 2009, we initiated
several cost cutting measures aimed at lowering our manufacturing overhead and
operating expenses. During fiscal 2011, our revenue declined by 25% compared to
fiscal 2010, and during the second half of 2011, our revenues fell by over 55%
as compared to the first half of 2011. For the first nine months of fiscal 2012,
our revenues fell by 67% when compared to the first nine months of fiscal 2011.

We believe that the continued reductions in our revenues over the last year were
due to several factors, including significant slowdowns in spending by wireless
network operators in several of our markets, including North America, Western
and Eastern Europe and the Middle East. In addition, we experienced a
significant reduction in demand from our original equipment manufacturing
customers. In response to these reductions in revenues, we initiated several
cost reduction measures to both lower our manufacturing costs and reduce our
operating expenses. We cannot predict if such measures will be successful, and
we may be required to further reduce operating expenses and manufacturing costs
or curtail certain aspects of our business if there is continued reduction in
demand by our customers.

In the past, there have been significant deferrals in capital spending by
wireless network operators due to delays in the expected deployment of
infrastructure equipment and financial difficulties on the part of the wireless
network operators who were forced to consolidate and reduce spending to
strengthen their balance sheets and improve their profitability. Continuing
economic weakness and uncertainty, increasing energy and commodity costs,
continued low consumer confidence, reduced property values, constrained credit
markets and concerns about sovereign debt in some countries in the European
Union have had a negative impact on the availability of financial capital, which
has limited capital expenditures by wireless network operators and will likely
have a negative impact on such expenditures going forward in the near term. All
of these factors can have a significant negative impact on overall demand for
wireless infrastructure products and, we believe, at various times, have
directly led to reduced demand for our products and increased price competition
within our industry, thereby reducing our revenues and contributing to our
reported operating losses.

We continue to invest in the research and development of wireless communications
network technology and the diversification of our product offerings, and we
believe that we have one of our industry's leading product portfolios in terms
of performance and features. We believe that our proprietary design technology
is a further differentiator of our products.

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Looking back over the last eight years, beginning in fiscal 2004, we focused on
cost savings while we expanded our market presence, as evidenced by our
acquisition of LGP Allgon. This acquisition involved the integration of two
companies based in different countries and was a complex, costly and
time-consuming process. During fiscal 2005, we continued to focus on cost
savings while we expanded our market presence, as evidenced by our acquisition
of selected assets and liabilities of REMEC, Inc.'s wireless systems business
(the "REMEC Wireless Acquisition"). We believe that this acquisition further
strengthened our position in the global wireless infrastructure market. In
October 2006, we completed the Filtronic plc wireless acquisition. We believe
that this strategic acquisition provided us with the leading position in
transmit and receive filter products, as well as broadened our RF conditioning
and base station solutions product portfolio, and added significant additional
technology to our intellectual property portfolio. For fiscal years 2007, 2008,
2009 and 2010, we completed the integration of these acquisitions, focused on
consolidating operations and reducing our overall cost structure. During this
same time, we encountered a significant unanticipated reduction in revenues,
which caused us to revise our integration and consolidation plans with a goal of
further reducing our operating costs and significantly lowering our breakeven
operating structure. As has been demonstrated during the last eight years, these
acquisitions do not provide any guarantee that our revenues will increase.

We measure our success by monitoring our net sales by product and consolidated
gross margins, with a short-term goal of attempting to achieve positive
operating cash flow while striving to achieve long-term operating profits. We
believe that there continues to be long-term growth opportunities within the
wireless communications infrastructure marketplace, and we are focused on
positioning the Company to benefit from these long-term opportunities in both
the traditional commercial market and new markets such as government, public
safety, military and homeland security.

Critical Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition and Results of
Operations is based on our unaudited consolidated financial statements included
in this Quarterly Report on Form 10-Q, which have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. The preparation of these financial statements
requires our management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and related disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. On an ongoing
basis, we evaluate these estimates and assumptions, including those related to
revenue recognition, allowances for doubtful accounts, inventory reserves,
warranty obligations, restructuring reserves, asset impairment, income taxes and
stock-based compensation expense. We base these estimates on our historical
experience and on various other factors which we believe to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities and the amounts of certain
expenses that are not readily apparent from other sources. These estimates and
assumptions by their nature involve risks and uncertainties, and may prove to be
inaccurate. In the event that any of our estimates or assumptions is inaccurate
in any material respect, it could have a material effect on our reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.

For a summary of our critical accounting policies and estimates, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of Part II of our Annual Report on Form 10-K for the fiscal year
ended January 1, 2012.

Accruals for Restructuring and Impairment Charges
In the third quarter and first nine months of fiscal 2012, we recorded
restructuring and impairment charges of $2.9 million and $16.8 million
respectively. Such charges relate to our restructuring plans. See further
discussion of these plans in Note 5 of the Notes to Consolidated Financial
Statements under Part I, Item I, Financial Information.

Restructuring and impairment accruals related primarily to workforce reductions
and facility closure related expenses. Such accruals were based on estimates and
assumptions made by management about matters which were uncertain at the time,
including the timing and amount of sublease income that will be recovered on
vacated property and the net realizable value of used equipment that is no
longer needed in our continuing operations. While we used our best current
estimates based on facts and circumstances available at the time to quantify
these charges, different estimates could reasonably be used in the relevant
periods to arrive at different accruals and the actual amounts incurred or
recovered may be substantially different from those based on the assumptions
utilized, either of which could have a material impact on the presentation of
our financial condition or results of operations for a given period. As a
result, we periodically review and revise the estimates and assumptions used and
reflect the effects of those revisions in the period that they become known.

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In the third quarter of fiscal 2012, we formulated and began to implement a plan
to lower our breakeven costs, conserve our cash and reduce our operating and
manufacturing cost structures (the "2012 Additional Restructuring Plan"). As
part of this plan, we initiated personnel reductions in both our domestic and
foreign locations across all functions, and we expect to impact approximately
120 employees as well as close certain offices. These reductions were taken in
further response to the continued lower revenue in the second and third quarter
of fiscal 2012. We expect to finalize this plan in the fourth quarter of 2012;
however, additional amounts may be accrued in future periods related to the
actions associated with this plan.

In the first quarter of fiscal 2012, we formulated and began to implement a plan
to further reduce manufacturing overhead and operating expenses (the "2012
Restructuring Plan"). As part of this plan, we initiated personnel reductions in
both our domestic and foreign locations. These reductions were taken in further
response to economic conditions and the continued decline in revenue in the
first quarter of fiscal 2012. We finalized this plan in the third quarter of
2012; however, additional amounts may be accrued in 2012 related to the actions
associated with this plan.

In November 2011, we formulated and began to implement a plan to further reduce
manufacturing overhead costs and operating expenses (the "2011 Restructuring
Plan"). As part of this plan, we initiated personnel reductions of approximately
110 employees in both our domestic and foreign locations, with primary
reductions in the U.S., Sweden, Finland, France, China and Canada. These
reductions were undertaken in response to economic conditions and the
significant decline in revenues in the third quarter of 2011. We finalized this
plan in the fourth quarter of 2011; however, additional amounts may be accrued
in 2012 related to actions associated with this plan.

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The following table presents a further analysis of our sales based upon our
various customer groups:
Three Months Ended
(in thousands)
Customer Group September 30, 2012 October 2, 2011 Wireless network operators and other $ 29,089 69 % $ 52,334 68 %
Original equipment manufacturers 13,036 31 24,744 32
Total $ 42,125 100 % $ 77,078 100 %
Sales decreased by 45% to $42.1 million for the third quarter of fiscal 2012,
from $77.1 million for the third quarter of fiscal 2011. This decrease was due
to several factors, including, but not limited to, a continued slowdown in
spending by North American network operators coupled with further weakness in
several international markets, including Western and Eastern Europe and the
Middle East. In addition, we experienced further reductions in demand with our
original equipment manufacturing customers both as part of our strategic plan to
reduce our dependence on low-margin commodity type original equipment
manufacturer business as well as an overall reduction in demand by our original
equipment manufacturer customers. In particular, we experienced reductions in
demand by Nokia Siemens Networks and Alcatel-Lucent of over 40% when compared to
the prior year period. Sales to our direct operator customers decreased by
approximately 44% for the third quarter of fiscal 2012 from the third quarter of
fiscal 2011. Sales to our original equipment manufacturers decreased by 47% for
the third quarter of fiscal 2012 from the third quarter of fiscal 2011. We
believe that, among other factors, the current negative global economic
environment has caused network operators to reduce or postpone their spending
plans for the near term while they evaluate the macro-economic pressures in each
individual market. In addition, our revenues have been impacted by our poor
financial position and by delays in payments of invoices to certain suppliers,
which has caused some of our suppliers to reduce or limit the amount of credit
that they allocate to us, which has impacted our ability to obtain single or
limited source components and has caused production and shipment delays that
have negatively impacted revenues during the third quarter of 2012.

Base station systems consist of products that are installed into or around the
base station of wireless networks and include products such as boosters,
combiners, filters, radio frequency power amplifiers and VersaFlex cabinets.

The decrease in all of our product group sales during the third quarter of
fiscal 2012 as compared with the third quarter of fiscal 2011 is due to the
previously mentioned significant decrease in demand we experienced from our
wireless network operator and original equipment manufacturer customers.

We track the geographic location of our sales based upon the location of our
customers to which we ship our products. Since many of our original equipment
manufacturer customers purchase products from us at central locations and then
re-ship the product with other base station equipment to locations throughout
the world, we are unable to identify the final installation location of many of
our products. The following table presents an analysis of our net sales based
upon the geographic area to which a product was shipped:
Three Months Ended
(in thousands)
Geographic Area September 30, 2012 October 2, 2011
Americas $ 22,035 52 % $ 32,525 42 %
Asia Pacific 4,814 12 14,596 19
Europe 11,094 26 25,244 33
Other International 4,182 10 4,713 6
Total $ 42,125 100 % $ 77,078 100 %
Revenues decreased in all regions in the third quarter of fiscal 2012 as
compared to the third quarter of fiscal 2011. The decrease is attributable to
the
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significant reductions in demand from our wireless network operator customers,
other direct customers and original equipment manufacturers, which we believe is
due to several factors, including, but not limited to, the current negative
global economic environment that has caused network operators to reduce or
postpone their equipment spending plans in most all the regions we operate in.

Our revenues have also been impacted by our poor financial performance and
delays in payments of invoices to certain suppliers, which has caused some
suppliers to reduce the amount of credit they allocate to us, which has
contributed to production and shipment delays. In addition, our poor financial
performance may cause some customers to limit the amount of business that they
do with us, due to their concerns about our financial condition. Since wireless
network infrastructure spending is dependent on individual network coverage and
capacity demands, we do not believe that our revenue fluctuations for any
geographic region are necessarily indicative of a trend for our future revenues
by geographic area.

A large portion of our revenues are generated in currencies other than the U.S.

Dollar. During the last year, the value of the U.S. Dollar has fluctuated
significantly against many other currencies. We have calculated that, when
comparing exchange rates in effect for the third quarter of fiscal 2012 to those
in effect for the third quarter of fiscal 2011, the change in the value of
foreign currencies as compared with the U.S. Dollar did not have a material
impact on our net sales.

For the third quarter of fiscal 2012, one customer, Samsung, accounted for 11%
of our total sales. No other customer accounted for 10% or more of our revenues.

For the third quarter of fiscal 2011, total sales to Ericsson was 11% and total
sales to Raycom, one of our European resellers, was 11% of our revenues.

A number of factors have caused delays, and may cause future delays in new
wireless infrastructure and upgrade deployment schedules throughout the world,
including deployments in the United States, Europe, Asia, South America and
other areas. In addition, a number of factors may cause original equipment
manufacturers to alter their outsourcing strategy concerning certain wireless
communications network products, which could cause such original equipment
manufacturers to reduce or eliminate their demand for external supplies of such
products or shift their demand to alternative suppliers or internal suppliers.

Such factors include lower perceived internal manufacturing costs and
competitive reasons to remain vertically integrated. Due to the possible
uncertainties associated with wireless infrastructure deployments and original
equipment manufacturer demand, we have experienced and expect to continue to
experience significant fluctuations in demand from our original equipment
manufacturer and network operator customers. Such fluctuations have caused and
may continue to cause significant reductions in our revenues and/or operating
results, which has adversely impacted and may continue to adversely impact our
business, financial condition and results of operations.

Cost of Sales and Gross Profit (loss)
Our cost of sales includes both fixed and variable cost components and consists
primarily of materials, assembly and test labor and overhead, which includes
equipment depreciation, facility lease expense, transportation costs and
warranty costs. Components of our fixed cost structure include test equipment
depreciation, facility lease expense, purchasing and procurement expenses and
quality assurance costs. Given the fixed nature of such costs, the absorption of
our overhead costs into inventory decreases and the amount of overhead variances
expensed to cost of sales increases as volumes decline as we have fewer units to
absorb our overhead costs against. Conversely, the absorption of our overhead
costs into inventory increases and the amount of overhead variances expensed to
cost of sales decreases as volumes increase as we have more units to absorb our
overhead costs against. As a result, our gross profit margins generally decrease
as revenue and volumes decline due to lower sales volume and higher amounts of
overhead variances expensed to cost of sales. Our gross profit margins generally
increase as our revenue and volumes increase due to higher sales volume and
lower amounts of overhead variances expensed to cost of sales.

The following table presents an analysis of our gross profit (loss):
Three Months Ended
(in thousands)
September 30, 2012 October 2, 2011
Net sales $ 42,125 100.0 % $ 77,078 100.0 %
Cost of sales:
Cost of sales 52,101 123.7 71,282 92.5
Restructuring and impairment charges 782 1.8 - -
Total cost of sales 52,883 125.5 71,282 92.5
Gross profit (loss) $ (10,758 ) (25.5 )% $ 5,796 7.5 %
Our gross profit decreased during the third quarter of fiscal 2012, compared to
the third quarter of fiscal 2011, primarily as a result of our significantly
lower revenues. The significant drop in our revenues during the third quarter of
fiscal 2012 caused us to be unable to absorb our overhead and manufacturing
costs, which resulted in the reduction in our gross margin as a percentage of
revenue. Gross margin was also negatively impacted by inventory related charges
of approximately $8.3 million associated with excess and obsolete inventory,
which is included in cost of sales, compared with $3.0 million in the third
quarter of fiscal 2011.

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In the third quarter of fiscal 2012, the Company recorded a restructuring and
impairment charge of approximately $1.0 million related to inventory that has
been or will be disposed of and will not generate future revenue at closed
facilities, and settled a vendor cancellation claim at a favorable amount of
$0.3 million that was previously charged to restructuring and impairment
charges.

The wireless communications infrastructure equipment industry is extremely
competitive and is characterized by rapid technological change, new product
development and product obsolescence, evolving industry standards and
significant price erosion over the life of a product. Certain of our competitors
have aggressively lowered prices in an attempt to gain market share. Due to
these competitive pressures and the pressures of our customers to continually
lower product costs, we expect that the average sales prices of our products
will continue to decrease and negatively impact our gross margins. In addition,
we have introduced new products at lower sales prices, and these lower sales
prices have impacted the average sales prices of our products. We have also
reduced prices on our existing products in response to our competitors and
customer demands. We currently expect that pricing pressures will remain strong
in our industry. Future pricing actions by our competitors and us may adversely
impact our gross profit margins and profitability, which could result in
decreased liquidity and adversely affect our business, financial condition and
results of operations.

A portion of our coverage solution sales include design, customization,
installation and implementation services and the supply of coverage solutions
products. We recognize revenue using the percentage-of-completion method for
these coverage solution projects. Due to the nature of these types of projects,
cost estimates can vary significantly, and the actual cost of such projects can
fluctuate significantly during the life of a project. These fluctuations, such
as the one which occurred in the first quarter of fiscal 2011 when our gross
profit was negatively impacted by a coverage solution project cost estimate
adjustment of approximately $3.6 million, can have a negative impact on our
gross profit margins and profitability, decrease revenues and adversely
impacting our business, financial condition and results of operations.

We continue to strive for manufacturing and engineering cost reductions to
offset pricing pressures on our products, as evidenced by our decisions to close
and consolidate several of our manufacturing locations as part of our
restructuring plans. However, we cannot guarantee that these cost reductions,
and our outsourcing or product redesign efforts will keep pace with price
declines and cost increases. If we are unable to further reduce our costs
through our manufacturing, outsourcing and/or engineering efforts, our gross
margins and profitability will be adversely affected.

Operating Expenses
The following table presents a breakdown of our operating expenses by functional
category and as a percentage of net sales:
Three Months Ended
(in thousands)
Operating Expenses September 30, 2012 October 2, 2011
Sales and marketing $ 10,365 24.6 % $ 7,544 9.8 %
Research and development 8,383 19.9 15,315 19.9
General and administrative 9,928 23.6 11,597 15.0
Restructuring and impairment charges 2,098 5.0 147 0.2
Total operating expenses $ 30,774 73.1 % $ 34,603 44.9 %
Sales and marketing expenses consist primarily of salaries and commissions,
travel expenses, advertising and marketing expenses, selling expenses, charges
for customer demonstration units and trade show expenses. Sales and marketing
expenses increased by $2.8 million, or 37.4%, during the third quarter of fiscal
2012 as compared to the third quarter of fiscal 2011, primarily due to increased
bad debt expense offset in part by lower personnel expense and lower trade show
and related marketing expenses. The personnel cost reductions were related to
our restructuring plans.

Research and development expenses consist primarily of ongoing design and
development expenses for new wireless communications network products, as well
as for advanced coverage solutions. We also incur design expenses associated
with reducing the cost and improving the manufacturability of our existing
products. Research and development expenses can fluctuate dramatically from
period to period depending on numerous factors, including new product
introduction schedules, prototype developments and hiring patterns. Total
research and development expenses decreased $6.9 million or 45.3% during the
third quarter of fiscal 2012, as compared to the third quarter of fiscal 2011,
due primarily to lower personnel costs, reduced outsourced professional fees and
lower materials expense. The personnel cost reductions were related to our
restructuring plans.

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General and administrative expenses consist primarily of salaries and other
expenses for management, finance, information systems, legal fees, facilities
and human resources. Total general and administrative expenses decreased $1.7
million, or 14.4% during the third quarter of fiscal 2012 as compared to the
third quarter of fiscal 2011, due primarily to lower personnel costs offset in
part by higher legal fees. The personnel cost reductions were related to our
restructuring plans.

Restructuring and impairment charges in operating expense of $2.1 million in the
third quarter of fiscal 2012 primarily related to severance for terminated
employees in domestic and global locations as well as facility closure costs and
fixed asset impairment charges. Restructuring charges of $0.1 million in the
third quarter of fiscal 2011, primarily for adjustments to severance costs for
previously terminated employees in Europe.

Additionally, we recognized a net foreign currency translation gain of $0.3
million in the third quarter of fiscal 2012, primarily due to the fluctuations
of the U.S. Dollar versus the Euro, Chinese RMB, and several other currencies,
compared with a loss of $2.2 million in the third quarter of fiscal 2011. Also
in the third quarter of fiscal 2012, we recognized a loss of $0.5 million
related to the termination of our line of credit with Wells Fargo and a loss of
$0.6 million related to the change in value of embedded derivatives the warrants
issued in connection with our new secured term loan.

Income Tax Provision
Our effective tax rate for the third quarter of 2012 was an expense of
approximately 13.5% of our pre-tax loss of $46.4 million, compared with a
benefit of 0.4% of our pre-tax loss of $35.2 million in the third quarter of
2011. We have recorded a valuation allowance against a portion of our deferred
tax assets pursuant to Accounting Standards Codification (ASC) Topic 740,
"Income Taxes," due to the uncertainty as to the timing and ultimate realization
of those assets. As such, for the foreseeable future, the tax provision or tax
benefit related to future U.S. earnings or losses will be offset substantially
by a reduction or increase in the valuation allowance. Accordingly, the tax
expense consisted primarily of taxes from operations in foreign jurisdictions,
primarily Sweden, India and Canada. We expect our tax rate to continue to
fluctuate based on the percentage of income earned in each jurisdiction. In the
third quarter of 2012, we changed our position on our legal entity and future
operations in China and no longer assert that our accumulated earnings in China
will be permanently reinvested. As a result, we recorded a provision of $5.3
million related to the withholding tax on our Chinese operation's earnings and
profits which would be repatriated to the U.S. jurisdiction upon dissolution. No
additional U.S. tax liability will result from the future dividend due to
existing net operating losses, which would offset any potential increase in U.S.

federal taxable income.

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Net Loss
The following table presents a reconciliation of operating loss to net loss:
Three Months Ended
(in thousands)
September 30, October 2,
2012 2011
Operating loss $ (41,532 ) $ (28,807 )
Other expense, net (4,909 ) (6,435 )
Loss before income taxes (46,441 ) (35,242 )
Income tax provision 6,287 (158 )
Net loss $ (52,728 ) $ (35,084 )
Our net loss for the third quarter of fiscal 2012 was $52.7 million, compared to
a net loss of $35.1 million for the third quarter of fiscal 2011. The net loss
in the third quarter of fiscal 2012 was largely due to our decreased revenues
during the period, which resulted in a larger operating loss. In addition, we
incurred additional inventory and bad debt related charges during the quarter,
which contributed to our net loss.

Nine Months ended September 30, 2012 and October 2, 2011
Net Sales
The following table presents a further analysis of our sales based upon our
various customer groups:
Nine Months Ended
(in thousands)
Customer Group September 30, 2012 October 2, 2011 Wireless network operators and other $ 87,022 68 % $ 254,625 66 %
Original equipment manufacturers 40,744 32 129,718 34
Total $ 127,766 100 % $ 384,343 100 %
Sales decreased by 67% to $127.8 million for the first nine months of fiscal
2012, from $384.3 million for the first nine months of fiscal 2011. This
decrease was due to several factors, including, but not limited to, a continued
slowdown in spending by North American network operators coupled with further
weakness in international markets, including Western and Eastern Europe, Asia
and the Middle East. In addition, we experienced further reductions in demand
with our original equipment manufacturing customers both as part of our
strategic plan to reduce our dependence on low-margin commodity type original
equipment manufacturer business as well as an overall reduction in demand by our
original equipment manufacturer customers. In particular, we experienced
reductions in demand by Nokia Siemens Networks and Alcatel-Lucent of over 88%
when compared to the prior year period. Sales to our direct operator customers
decreased by approximately 66% for the first nine months of fiscal 2012 from the
first nine months of fiscal 2011. Sales to our original equipment manufacturers
decreased by 69% for the first nine months of fiscal 2012 from the first nine
months of fiscal 2011. We believe that, among other factors, the current
negative global economic environment has caused network operators to reduce or
postpone their spending plans for the near term while they evaluate the
macro-economic pressures in each individual market. Due to our poor financial
position, and resulting delays in payments of invoices to certain suppliers,
some of our suppliers have reduced or limited the amount of credit that they
allocate to us, which has also impacted our ability to obtain single or limited
source components which has caused production and shipment delays that have
negatively impacted revenues during the first nine months of 2012.

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The following table presents a further analysis of our sales based upon our
various product groups:
Nine Months Ended
(in thousands)
Wireless Communications
Product Group September 30, 2012 October 2, 2011
Antenna systems $ 75,181 59 % $ 186,319 49 %
Base station systems 25,539 20 155,798 40
Coverage systems 27,046 21 42,226 11
Total $ 127,766 100 % $ 384,343 100 %
The decrease in all of our product group sales during the first nine months of
fiscal 2012 as compared with the first nine months of fiscal 2011 is due to the
previously mentioned significant decrease in demand we experienced from our
wireless network operator and original equipment manufacturer customers.

The following table presents an analysis of our net sales based upon the
geographic area to which a product was shipped:
Nine Months Ended
(in thousands)
Geographic Area September 30, 2012 October 2, 2011
Americas $ 59,528 47 % $ 166,993 43 %
Asia Pacific 23,465 18 100,552 26
Europe 34,591 27 102,115 27
Other International 10,182 8 14,683 4
Total $ 127,766 100 % $ 384,343 100 %
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Revenues decreased in all regions in the first nine months of fiscal 2012 as
compared to the first nine months of fiscal 2011. The decrease is attributable
to the significant reductions in demand from our wireless network operator
customers, other direct customers and original equipment manufacturers, which we
believe is due to several factors, including, but not limited to, the current
negative global economic environment that has caused network operators to reduce
or postpone their equipment spending plans. Our revenues have also been impacted
by our poor financial performance, and delays in payments of invoices to certain
suppliers, which has caused some suppliers to reduce the amount of credit that
they allocate to us, which has contributed to production and shipment delays. In
addition, our poor financial performance may cause some customers to limit the
amount of business that they do with us, due to their concerns about our
financial condition. We experienced continued slowness in capital growth
spending by wireless network operators in most of the regions we operate in.

Since wireless network infrastructure spending is dependent on individual
network coverage and capacity demands, we do not believe that our revenue
fluctuations for any geographic region are necessarily indicative of a trend for
our future revenues by geographic area.

A large portion of our revenues are generated in currencies other than the U.S.

Dollar. During the last year, the value of the U.S. Dollar has fluctuated
significantly against many other currencies. We have calculated that, when
comparing exchange rates in effect for the first nine months of fiscal 2012 to
those in effect for the first nine months of fiscal 2011, the change in the
value of foreign currencies as compared with the U.S. Dollar did not have a
material impact on our net sales.

For the first nine months of fiscal 2012, no customer accounted for 10% or more
of our revenues. For the first nine months of fiscal 2011, sales to KMM
Telecommunications (formerly known as Team Alliance), one of our North American
resellers, accounted for 18% of our total sales, sales to Nokia Siemens Networks
accounted for approximately 17% of total sales, and sales to Raycom, one of our
European resellers, accounted for approximately 13% of our total sales.

Cost of Sales and Gross Profit (Loss)
The following table presents an analysis of our gross profit (loss):
Nine Months Ended
(in thousands)
September 30, 2012 October 2, 2011
Net sales $ 127,766 100.0 % $ 384,343 100.0 %
Cost of sales:
Cost of sales 155,990 122.1 294,895 76.7
Restructuring and impairment charges 11,341 8.9 - -
Total cost of sales 167,331 131.0 294,895 76.7
Gross profit (loss) $ (39,565 ) (31.0 )% $ 89,448 23.3 %
Our gross profit decreased during the first nine months of fiscal 2012 compared
to the first nine months of 2011 primarily as a result of our significantly
lower revenues. The significant drop in our revenues during the first nine
months of fiscal 2012 caused us to be unable to absorb our overhead and
manufacturing costs, which resulted in the reduction in our gross margin as a
percentage of revenue. Gross margin was also negatively impacted by inventory
related charges of approximately $22.9 million associated with excess and
obsolete inventory and scrapping of inventory, compared with $3.5 million in the
first nine months of fiscal 2011. In addition, gross profit was impacted by
warranty charges of $9.3 million in the first nine months of fiscal 2012,
compared with $10.6 million in the first nine months of fiscal 2011, which were
higher in 2011 due to higher specific warranty claims.

We incurred $11.3 million of restructuring charges during the first nine months
of fiscal 2012, which included a charge of approximately $7.2 million related to
inventory that will be disposed of and will not generate future revenue, as well
as vendor cancellation charges of $3.8 million, primarily related to the
transactions with Tatfook and severance charges of approximately $0.3 million.

Total research and development expenses decreased $15.7 million, or 32.9%,
during the first nine months of fiscal 2012 compared to the first nine months of
fiscal 2011, primarily due to lower personnel costs, reduced outsourced
professional fees and lower materials expense. The personnel cost reductions
were related to our restructuring plans.

Total general and administrative expenses decreased $4.5 million, or 13.0%,
during the first nine months of fiscal 2012 as compared to the first nine months
of fiscal 2011, due primarily to lower personnel costs. The personnel cost
reductions were related to our restructuring plans.

Restructuring charges in operating expense of $5.5 million were recorded in the
first nine months of fiscal 2012 due to a realized loss of $1.5 million on the
sale of our building in Finland, fixed asset impairment charges and facility
closure costs in Finland, and severance costs of $3.9 million for terminated
employees at various domestic and international locations. Restructuring charges
of $0.2 million were recorded in the first nine months of 2011, primarily for
severance costs.

Other Expense, net
The following table presents an analysis of other expense, net:
Nine Months Ended
(in thousands)
September 30, 2012 October 2, 2011
Interest income $ 118 0.1 % $ 168 0.0 %
Interest expense (12,027 ) (9.4 ) (9,544 ) (2.5 )
Foreign currency loss, net (386 ) (0.3 ) (4,219 ) (1.0 )
Gain on exchange of convertible debt - - (874 ) (0.2 )
Loss on early extinguishment of debt (506 ) (0.4 )
- -
Change in value of derivatives (581 ) (0.4 ) - -
Other income, net 370 0.2 1,198 0.3
Other expense, net $ (13,012 ) (10.2 )% $ (13,271 ) (3.4 )%
Interest income decreased during the first nine months of fiscal 2012 compared
to the first nine months of fiscal 2011, due to lower cash balances. Interest
expense increased by $2.5 million during the first nine months of fiscal 2012 as
compared to the first nine months of fiscal 2011 primarily due to non-cash bond
principal accretion related to our 2.75% Notes and interest on our secured term
loan. Included in non-cash charges are the amortization of debt issuance costs,
debt discount and bond accretion totaling $5.2 and $3.6 million for the first
nine months of 2012 and 2011, respectively. Additionally, we recognized a net
foreign currency loss of $0.4 million in the first nine months of fiscal 2012,
primarily due to the fluctuations of the U.S. Dollar versus the Euro, Chinese
RMB and several other currencies, as compared to the loss of $4.2 million in the
first nine months of fiscal 2011. The reduction of other income (expense), net
from the first nine months of fiscal 2011 to the first nine months of fiscal
2012 of $0.8 million is primarily related to lower net sub-lease income.

Income Tax Provision
Our effective tax rate for the nine months ended September 30, 2012 was an
expense of approximately 6.7% of our pre-tax loss of $143.4 million, compared
with an expense of approximately 12.0% of our pre-tax loss of $31.3 million in
the first nine months of 2011. We have recorded a valuation allowance against a
portion of our deferred tax assets pursuant to Accounting Standards Codification
(ASC) Topic 740, "Income Taxes," due to the uncertainty as to the timing and
ultimate realization of those assets. The Company continued to record valuation
allowances against the net deferred tax assets in Finland and China of $2.9
million in the third quarter of 2012. As such, for the foreseeable future, the
tax provision or tax benefit related to future Chinese, Finnish and U.S.

earnings or losses will be offset substantially by a reduction or increase in
the valuation allowance. Accordingly, current tax expense consisted primarily of
taxes from operations in foreign jurisdictions, primarily Sweden, India and
Canada. We expect our tax rate to continue to fluctuate based on the percentage
of income earned in each jurisdiction. In the third quarter of 2012, we changed
our position on our legal entity and future operations in China and no longer
assert that our accumulated earnings in China will be permanently reinvested. As
a result, we recorded a provision of $5.3 million related to the withholding tax
on our Chinese operation's earnings and profits which would be repatriated to
the U.S. jurisdiction upon dissolution. No additional U.S. tax liability will
result from the future dividend due to existing net operating losses, which
would offset any potential increase in U.S. federal taxable income.

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Net Loss
The following table presents a reconciliation of operating loss to net loss:
Nine Months Ended
(in thousands)
September 30, October 2,
2012 2011
Operating loss $ (130,431 ) $ (18,022 )
Other expense, net (13,012 ) (13,271 )
Loss before income taxes (143,443 ) (31,293 )
Income tax provision 9,657 3,745
Net loss $ (153,100 ) $ (35,038 )
Our net loss for the first nine months of fiscal 2012 was $153.1 million,
compared to a net loss of $35.0 million for the first nine months of fiscal
2011. The net loss in the first nine months of fiscal 2012 was largely due to
our decreased revenue during the period, which resulted in a gross loss and,
consequently, an operating loss and the resulting net loss.

Liquidity and Capital Resources
Introduction
We have historically financed our operations through a combination of cash on
hand, cash provided from operations, available borrowings under a bank line of
credit or term loan, private debt offerings and both private and public equity
offerings. We no longer have a bank line of credit. As a result, our principal
sources of liquidity currently consist of our existing cash balances, funds
generated from future operations and additional term loans under our Credit
Agreement. As of September 30, 2012, we had working capital of $94.6 million,
including $16.3 million in unrestricted cash and cash equivalents, as compared
to working capital of $194.3 million at January 1, 2012, which included
$64.1 million in unrestricted cash and cash equivalents. We currently invest our
excess cash in short-term, investment-grade, money-market instruments with
maturities of three months or less. We typically hold such investments until
maturity and then reinvest the proceeds in similar money market instruments. We
believe that all of our cash investments would be readily available to us should
the need arise.

Cash Flows
The following table summarizes our cash flows for the nine months ended
September 30, 2012 and October 2, 2011:
Nine Months Ended
(in thousands)
September 30, October 2,
2012 2011
Net cash provided by (used in):
Operating activities $ (84,757 ) $ (36,514 )
Investing activities 4,937 (5,448 )
Financing activities 31,935 26,290Effect of foreign currency translation on cash and
cash equivalents
82 (310 )
Net decrease in cash and cash equivalents $ (47,803 ) $ (15,982 )
Operating Activities
Net cash used in operating activities in the first nine months of fiscal 2012
was $84.8 million as compared to $36.5 million used in operating activities in
the first nine months of fiscal 2011. The increase in cash used in operating
activities was due to the reduction in revenue and related increase in net loss,
and an increase in working capital, primarily a decrease in accounts payable,
accrued expenses and an increase in prepaid and other current assets, partially
offset by a decrease in accounts receivable.

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Investing Activities
Net cash provided by investing activities in the first nine months of fiscal
2012 was $4.9 million as compared to $5.4 million used by investing in the first
nine months of fiscal 2011. The $4.9 million in net cash provided by investing
activities during the first nine months of fiscal 2012 reflects proceeds from
the sale of our Finland facility and other assets of approximately $5.6 million
and cash received from the Tatfook transaction of approximately $6.9 million,
along with various proceeds for the sale of other excess fixed assets, partially
offset by capital expenditures of $2.5 million and an increase in restricted
deposits of $5.6 million. The $5.4 million in net cash used by investing
activities during the first nine months of fiscal 2011 represents capital
expenditures of $5.8 million partially offset by proceeds from the sale of
property, plant and equipment of $0.4 million. The majority of the capital
spending during both periods related to computer hardware and test equipment
utilized in our manufacturing and research and development areas. We expect our
capital spending requirements for the remainder of this year to range between $1
million and $2 million, consisting of test and production equipment, as well as
computer hardware and software.

Financing Activities
Net cash provided by financing activities during the first nine months of fiscal
2012 and 2011 was $31.9 million and $26.3 million, respectively. The 2012 amount
was primarily comprised of proceeds from the issuance of senior secured debt,
net of debt issuance costs, and proceeds from our employee stock purchase plan,
and the 2011 amount was comprised of proceeds from debt issuance of $100.0
million and proceeds from our employee stock purchase plan of $1.6 million,
offset by the retirement of long-term debt of $46.8 million, the repurchase of
common stock of $25.0 million and debt issuance costs of $3.5 million.

On September 11, 2012, we entered into a credit agreement ("Credit Agreement")
with P-Wave Holdings, LLC (an affiliate of The Gores Group, LLC), as the Agent
(the "Agent"), and the various financial institutions and other persons from
time to time parties thereto (the "Lenders").

Pursuant to the Credit Agreement, the Lenders provided an initial $35 million
secured term loan to us (the "Initial Draw") and shall, from time to time
thereafter, make available to us additional secured term loans of up to $15
million, which we may request in one or more advances, subject to the
satisfaction of certain closing conditions, including: (i) no event of default
occurring or continuing under the Credit Agreement; (ii) prior payment in full
of all fees and expenses due under the Credit Agreement; (iii) prior issuance of
all warrants due and payable under the Credit Agreement; and (iv) us providing
Agent with evidence of the Company's achievement of revenues for the fiscal
quarter ended on or about January 1, 2013 totaling $60 million. The Credit
Agreement further contemplates that the lenders may make available to us
incremental secured term loans in an aggregate amount not to exceed $100 million
(the "Incremental Loans"), for a total potential commitment of up to $150
million in principal amount of term loans under the Credit Agreement. However,
there is no obligation on the part of us to accept these Incremental Loans and
there is no obligation on the part of the lenders to make any Incremental Loans.

On July 26, 2011, we completed the private placement of $100 million in original
principal amount of our 2.75% Convertible Senior Subordinated Notes due 2041
(the "2.75% Notes"). We used the proceeds from the sale of the 2.75% Notes to
repurchase $57.9 million in aggregate principal amount of our 1.875% Notes. We
also utilized approximately $25.0 million of the net proceeds from the private
placement of the 2.75% Notes to repurchase 2.2 million shares of our Common
Stock, and incurred debt issuance costs of $3.6 million during the year ended
January 1, 2012.

We have a total of $256.1 million of long-term convertible subordinated notes
outstanding as of September 30, 2012, consisting of $0.1 million of our 1.875%
Convertible Subordinated Notes due 2024 (the "1.875% Notes"), $150.0 million of
our Convertible Subordinated Notes due October 2027 (the "3.875% Notes") and
$106.0 million of the 2.75% Notes. Holders of the 3.875% Notes may require us to
repurchase all or a portion of their notes for cash on October 1, 2014, 2017 and
2022 at 100% of the principal amount of the notes, plus accrued and unpaid
interest. Holders of the 2.75% Notes may require us to repurchase all or a
portion of their notes for cash on July 15, 2018, 2025 or 2032 for a repurchase
price equal to 100% of the accreted amount of the 2.75% Notes, plus accrued and
unpaid interest on the original principal amount.

We are in the process of pursuing other financing or refinancing options. There
is no assurance that we will be able to obtain new financing on favorable terms
or at all.

Liquidity
We have experienced significant recurring net losses and operating cash flow
deficits for the past five quarters. Our ability to continue as a going concern
is dependent on many factors, including among others, our ability to meet the
financial covenants in our Credit Agreement, including those covenants that are
a pre-condition to receiving additional term loans under the Credit Agreement,
our ability to raise additional funding, and our ability to generate positive
cash flow from operations by increasing revenue and successfully restructuring
operations to lower manufacturing costs and reduce operating expenses.

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As of September 30, 2012, we had $16.3 million in unrestricted cash and cash
equivalents available to support ongoing operations. During the nine months
ended September 30, 2012, we used approximately $84.8 million of cash in
operating activities. In September 2012, we entered into the Credit Agreement
under which we obtained a $35 million secured loan under which we received net
proceeds of approximately $26.8 million (after deducting debt issue costs and
the required reserve amount of $5 million that is included in restricted cash)
from such term loan. The Lenders also agreed to provide an additional $15
million secured term loan that is available in the first quarter of 2013
assuming we meet certain covenants and pre-conditions in the Credit Agreement.

The Lenders may also to provide up to an additional $100 million in secured
terms loans, which the Lenders can extend at its sole discretion.

Although we obtained a secured term loan in the third quarter of 2012, our
continued negative cash flow from operations, declining revenue and cash
expenses from restructuring activities raise substantial doubt about our ability
to continue as a going concern.

We plan to address this situation by implementing restructuring plans designed
to reduce our operating expenses and manufacturing costs. We believe that our
ability to have sufficient cash flows to continue as a going concern for the
next twelve months is dependent upon us: (1) meeting the fourth quarter revenue
covenant of $60 million and complying with the other pre-conditions to obtaining
an additional $15 million secured term loan under the Credit Agreement and
remaining in compliance with all other financial covenants, and as a result,
receiving the additional $15 million available to us under the Credit Agreement
in the first quarter of 2013; (2) remaining in compliance with the financial
covenants throughout 2013; (3) successfully implementing restructuring actions;
(4) significantly reducing our negative cash flows from operating activities;
(5) successfully collecting our billed and unbilled accounts receivable; and (6)
having other net favorable working capital changes. However, should we be
unsuccessful with one or more of these items, we believe that we will need to
raise additional funding to continue as a going concern for the next twelve
months, which funding may not be available on acceptable terms or at all.

Off-Balance Sheet Arrangements
Our off-balance sheet arrangements consist primarily of conventional operating
leases, purchase commitments and other commitments arising in the normal course
of business, as further discussed in our Annual Report on Form 10-K for the
fiscal year ended January 1, 2012, in Part II, Item 7 under the heading
"Contractual Obligations and Commercial Commitments". As of September 30, 2012,
we did not have any other relationships with unconsolidated entities or
financial partners, such as entities often referred to as structured finance or
special purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually-narrow or
limited purposes.